The imbalance between supply and demand continues to worsen as the pandemic disrupts supply chains in global markets. The world’s fuel prices continue to rise, affecting the prices of fuel and raw materials in Vietnam. The inflation pressure was extremely high in 2022. Among them, steel prices have increased by about 25% to 30% on average since the beginning of 2021. In addition, the Vietnamese government has reduced the corporate income tax rate, which has become a key factor for foreign investment to consider transfering supply chains to Vietnam. In response, our practical strategic plans are as follows:
Countermeasures
Motorcycle
Industry Trends | Opportunities | Risk | Countermeasures |
• Diversified product lines to satisfy the demand for one-stop purchasing | • The infrastructure in Vietnam is still at the development stage. The day-to-day transport relies mostly on motorcycles. | • The growth in Vietnam’s motorcycle market is slowing down. | • Besides exporting automotive and motorcycle parts as a source of income, Eurocharm also coordinated with Honda, Yamaha and Piaggio to explore completely-built-up (CBU) automobile export opportunities. In 2019, the number of exported CBU automobiles from three major customers reached 300 thousand. Since customers have a stricker standard for the exported CBU automobiles, Eurocharm is increasingly recognized due to our competitive quality, delivery time, and price. The amount set for the producing exported vehicles is increasing every year. In addition, the Company is expanding the opportunity in the electric mortorcycle market and gradually increasing exporting the sales volume of electric motorcycle components. |
• Eurocharm maintains long-term good partnerships with its major customers and provides insights and demands regarding market information to jointly expand the market. | • The scale of the ASEAN economy continues to grow, along with the demand for motorcycles. | • The core product design capability still lies in the hands of OBMs. | • In upcoming years, Eurocharm is prepared to strengthen the R&D department with product design capability, adding R&D equipment for drawing and product characteristics verification, and continuously investing in R&D of new products to improve product quality and provide integrated and high value-added products to make our products more competitive. • Since 2013, Eurocharm have introduced aluminum alloy for processes. In recent years, Eurocharm have successfully entered mass production and have been gradually expanding our business with major medical equipment manufacturers in Europe and the U.S. and leisure vehicle customers in North America. In 2015, Polaris has expanded its business to include high value-added customers such as Ducati and Harley-Davidson, while exporting products from iron parts to high-end aluminum products. |
• Globalization vision with product management and investment in improved automated production. | • Eurocharm possesses an extraordinary management team. | • The cost of largely imported raw materials could be fluctuated by the exchange rate. | • Eurocharm began domestic procurement along with importing customer certified raw materials. The ratio of local raw materials has gradually increased from 50% to 80%. Due to this shift, the exchange rate has only minimal effect on Company’s operation cost. In addition, with the unified purchase system every quarter, the Company is able to easily manage materials and reduce the risk of running low or waste. |
Medical Equipment
Industry Trends | Opportunities | Risk | Countermeasures |
• Safety is of the most importance for automobiles and motorcycles, so vehicle assembly factories have extremely strict requirements for quality. Our company has been certified for many years with ISO 9001 & ISO 14001 & ISO/IATF 16949 quality management systems, and our automotive and motorcycle components have been highly recognized by customers for their quality. In addition, we also obtained ISO 13485 certification for the medical equipment industry in 2010. • Trusting employee relations and high productivity. | • The world’s population is aging and the demand for medical equipment is increasing. • American and Japanese medical equipment markets continue to expand as the government implements healthcare supporting polices. | • The Company juggles between producing high-quality refined medical equipment while competing with low-quality affordable products. | • Eurocharm’s medical equipment are supplied to a niche market which specializes in long-term home care or patient care. The customers are in various developed countries including France, Japan, and the United States. Under the circumstances that the target markets are consumers in economically developed countries, the product quality is considered more important than price competitiveness. From the sales growth year after year, it is believed that the customers trust and rely on Eurocharm’s products. Also, as the minimum wages and social insurance expenditure increase in China, Eurocharm has a comparative advantage manufacturing medical equipment in Vietnam. If the competition chooses to source cheaper materials, it should eventually reflect on the quality of the equipment. Additionally, the Company has the capacity of developing medical equipment tooling which sets it apart from the rest of competition. Eurocharm has, on various occasions, co-developed with customers or self-developed tooling or products. |
Business Plan
The global economy has gradually stepped away from the impact of the COVID-19 pandemic, and production orders are gradually recovering. Although there are still a few regions affected by wars and inflation, the operational pressure on businesses has significantly decreased. Furthermore, the quarterly decline in material prices has contributed to a significant improvement in the Company’s operations and profitability in the fiscal year 2022.
Expansion of Production Capacity | Increase of the Proportion of Health and Medical products | Development of Electric Scooters and Recreational Vehicles | Development of Automobile Parts |
To support the future growth of our clients’ businesses, our company will continue to invest in equipment and expand production capacity according to their needs. Furthermore, the company will expand its mold factory and related processing equipment. It will also improve the production ratio of molds, inspections, and jigs, as well as increase the speed of product development. Additionally, efforts will be made to accelerate the introduction of automation to mitigate operational risks stemming from rising wages and labor shortages in Vietnam. | Equipment manufactures in Europe, the United States, and Japan and seek opportunities for introducing new products. This year, the impact of economic fluctuations in Europe and the United States has led to delays in the mass production of several new development projects. However, all mass production plans are expected to initiate in 2024, and it is expected that the growth of this business can be restored this year. | As of the end of 2023, several customers have started mass production or development of their electric scooters. And it is hoped that by leveraging the group’s experience and advantages in the production of scooter frames, new business opportunities in the electric scooter sector can be continuously explored. In terms of recreational vehicles, the Company has been actively investing resources to expand business opportunities. The existing brands in North America and Europe are steadily increasing their output volumes, the Company also expects to launch new products in 2024. The relevant business is expected to maintain a high level of growth in the coming years. | In response to the opportunities presented by electric vehicles and automobile components, our company is not only strengthening cooperation with existing customers but also actively pursuing business development with other manufacturers. Additionally, we are actively expanding into the electric vehicle component business, aiming to contribute to future revenue and profit growth. |
External Initiatives
On September 10, 2014, the 68th session of the United Nations General Assembly adopted the Sustainable Development Goals (SDGs) as the successor to the United Nations Post-2015 Development Agenda. In 2015, the United Nations officially released 17 SDGs and 169 sub-targets, establishing a clear vision and priorities for sustainable development. The Group focuses on achieving full productive employment before 2030, so that all men and women can have a decent job. In addition, since Vietnam is a developing country, Eurocharm encourages employees to innovate and increases the number of R&D staff and R&D spending.